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Brookhaven Supervisor Edward P. Romaine, warning of millions of dollars in potential tax losses, says he wants to crack down on banks, mortgage firms and others that improperly keep STAR tax exemptions after taking over properties from homeowners.

Romaine is proposing a local law mandating that the institutions inform the town that properties are no longer eligible for the tax break. He said only homeowners in their primary residence -- not financial institutions -- can claim the tax breaks under the state STAR program, which average $750 to $1,150 per home.

Romaine's legislation would require banks and other mortgage firms to notify the town assessor within 30 days of the loss of exemption. Those notifications would be required not only for foreclosures, but in cases where the homeowner stops making mortgage payments and abandons a property. Fines for violations would be up to $5,000. The measure also would cover exemptions for veterans.

The town board on Tuesday scheduled a public hearing on the measure for May 6.

Romaine estimates there are at least 2,000 foreclosures in Brookhaven, which could mean a loss of as much as $2.3 million in tax revenue annually.

DiNapoli found 19.6 percent of exemptions were awarded improperly. Sixty-four percent of those were for homes that were not a primary residence, and 6 percent resulted from foreclosure problems.

DiNapoli estimated the state lost $13 million in 2010-11 and will lose another $73 million through 2015-16, solely for individual mailing addresses that receive exemptions for multiple parcels. He said overall losses are "likely significantly higher and much more costly to the state."

Michael P. Smith, president of the New York Bankers Association, said in a statement, "We have been working with public officials at all levels of government on the foreclosure issue for several years . . . We look forward to reviewing this new proposal and working with the town supervisor toward a satisfactory solution."

When the private homeowner abandons a house or the bank forecloses, Romaine said the exemption by law should be lost: "The banks have the information and we are simply putting the burden on them to provide notification," he said. Ron Kleusener, Babylon's chief of staff, said the town has an aggressive program to keep abandoned properties from deteriorating and recoup money spent by the town. He called Romaine's idea worthwhile because it often takes significant time to track down ownership. "He's onto something here. It's an excellent idea," Kleusener said.